Learning to trade with the major trend is one of the most difficult tasks to master in the stock trading business. Novice stock traders think they can easily trade with the trend and change their life. But after trading the market for few months, they realize trend trading strategy is not that easy to master. You need to devote yourself and learn the ins and outs of this business to deal with the major trend.
Most of the time, rookies lose hope and quit trading. They think the market is rigged to a certain extent. But if you read this article, you will know the proper way to ride a trend. You can expect to trade the trend just like the professional traders in Hong Kong.
Understanding the trend
Before you start learning about the trend trading strategy, you need to understand what the trend is a trend. A trend is nothing but the direction of the price movement. If the price of a certain stock keeps on rallying for a few weeks or days, you can say the overall trend for that certain asset is bullish. On the contrary, if the price of the asset keeps on falling, you may say the trend is bearish. Based on the direction of the price movement, we have to determine the trend.
Learning the basics
You have to learn the basics to master the art of trend trading strategy. For instance, you should have the skills to use the trend line strategically. Professional traders always recommend the rookies open a demo account with Saxo. By using the demo account from Saxo, the retail traders can learn the basics of the market without risking any real money. Though the initial learning phase will be tough, you have to overcome the challenges with strong confidence.
Drawing the trend line
Most novice traders fail to draw the trend line while trading the stock market. Either they choose the lower time frame or they are forced to join the key swing points in the market. To draw a valid trend line a trader needs to rely on the daily or the weekly time frame. And they need to connect a minimum of three critical swing points. So, learn to draw the trend line in the higher time frame by using a demo account. Once you become skilled in doing this, you should be able to execute the trades at the important support and resistance level.
Use the candlestick pattern
Trading the trend line is a bit risky unless you learn to use the price action confirmation signals. To improve your trade accuracy, you must learn to use the price action confirmation signals from the start. Most of the time, the rookies consider the formation of the Japanese candlestick pattern as a complex task. But if you take the time and evaluate the single candlestick patterns formed at the important support and resistance level, learning about the candlestick pattern strategy will become easier.
Learn to use the indicator
Smart traders always use the indicator to filter the trade signals. Without learning to filter the trade signals, it will become a very tough job for retail investors to find reliable trade signals. Most of the time, you will notice the false signals are generated during the event of the economic news release. Unless you have strong knowledge regarding the use of the indicators, it will be a big challenge to filter out the false signals. So, we strongly suggest the novice traders learn about the use of indicators to filter the potential trade signals.
Trend trading strategy might seem tough but if you follow the tips mention in this article, you should be able to trade with the major trend within a short time. So, do not lose hope and try to trade this market with the major trend. Last but not least, keep the risk factor low, because you never can know what the results of the trades will be.